the visible hand

it is the theory which decides what can be observed – einstein

lumber futures closed sharply lower

Posted by ecoshift on December 1, 2008

CME Lumber Review: Sharply Lower On Weak Stocks, Cash
Mon, Dec 1 2008, 20:38 GMT

CME Lumber Review: Sharply Lower On Weak Stocks, Cash

KANSAS CITY (Dow Jones)–CME lumber futures closed sharply lower Monday as steep declines in the Dow Jones Industrial Average added to pressure from a nearly lifeless cash market.

The nearby Jan contract fell $5.50 per 1,000 board feet, or 2.84%, to close at $188.00, while March settled $8.00, or 3.81%, lower, at $201.80. May settled $8.30, or 3.66%, lower at $218.70 and at one point was down the $10.00 daily limit.

A Chicago-based broker said the feature of the day was position rolling out of January and into March.

During the session, the January/March spread traded 755 times in a range from $13 to $14.60, premium March, and closed at $13.80.

The March/May spread traded only six times at $15 to $15.80, premium May, and closed at $16.90.

Fundamental traders sold because the cash market that was too weak to support the premiums built into the futures market, a western broker said. Cash markets were nearly inactive, and prices were difficult to pin down.

In addition, the back months of the market were carrying a premium to the nearby months that was unsustainable, the Chicago-based broker said.

As with other commodity markets, the lumber market declined as the stock market lost ground after five straight closes higher, brokers said. The Dow Jones Industrial Average has become the leading minute-by-minute economic indicator, and traders lacked the confidence to buck the indicator.

The brokers said the market left a gap on daily charts that it will want to fill eventually, but it also hit limit down in May, which indicates there is business yet to be done below that level.

Dow Jones Newswires published a price for British Columbia spruce-pine-fir 2x4s of $180 to $185, unchanged from Friday.

JAN 188.00 dn 5.50 192.60 187.80
MAR 201.80 dn 8.00 208.00 201.30
MAY 218.70 dn 8.30 223.80 217.00

-By Lester Aldrich, Dow Jones Newswires; 913-322-5179;

(END) Dow Jones Newswires

December 01, 2008 15:38 ET (20:38 GMT)”


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